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Quizzes > Business & Finance > Finance & Economics

Master Bank Reconciliation Statements - Take the Quiz!

Think you can ace these bank reconciliation practice questions? Dive in!

Difficulty: Moderate
2-5mins
Learning OutcomesCheat Sheet
Paper art illustration of bank reconciliation quiz theme with coins bills ledger elements on dark blue background

This bank reconciliation statement quiz helps you practice matching cash book entries with bank statement lines and find errors. Use it to spot gaps before an exam or month-end, and if you need a quick refresh, review debits and credits here .

What is the primary purpose of preparing a bank reconciliation statement?
To calculate accounts receivable turnover
To record depreciation expenses
To ensure the cash balance per books matches the bank statement balance
To adjust inventory valuation
A bank reconciliation statement is prepared to match the cash balance in the company's records with the balance shown on the bank statement. This process identifies timing differences and errors between the two records. Reconciling ensures that discrepancies such as outstanding checks or deposits in transit are properly accounted for.
In a bank reconciliation, outstanding checks refer to which of the following?
Checks returned due to non-sufficient funds
Checks received from customers but not yet deposited
Checks written by the company and recorded in the cash book but not yet cleared by the bank
Bank errors in recording check amounts
Outstanding checks are those that have been issued and recorded by the company but have not yet been presented to or processed by the bank. They reduce the company's book balance but are not reflected on the bank statement until cleared. Identifying these checks is crucial for accurate reconciliation.
Deposits in transit are best described as:
Deposits recorded by the bank but not by the company
Returned deposits due to errors
Deposits recorded in the cash book but not yet reflected on the bank statement
Deposits on which the bank charged a fee
Deposits in transit are amounts received and recorded by the company that have not yet been processed and credited by the bank. They cause the book balance to exceed the bank statement balance until the bank clears them. This is a common reconciling item.
Bank service charges shown on the bank statement should be:
Recorded as a liability
Added to the book balance
Ignored in the bank reconciliation
Subtracted from the book balance as an expense adjustment
Bank service charges represent fees the bank deducts directly from the account. Since the company's books do not reflect these charges until reconciliation, you must reduce the book balance by recording the charges as an expense.
If the bank makes an error in favor of the depositor (the company), this error should be:
Deducted from the book balance
Deducted from the bank statement balance
Added to the book balance
Added to the bank statement balance
When the bank has credited the depositor's account incorrectly to the depositor's benefit, the bank statement balance is overstated. To reconcile, you must deduct the erroneous amount from the bank statement balance.
Which side of the reconciliation is impacted by bank service charges that have not yet been recorded in the company's books?
Bank side - deduct the charge from the bank statement balance
Book side - deduct the charge from the book balance
Bank side - add the charge to the bank statement balance
Book side - add the charge to the book balance
Unrecorded bank service charges appear on the bank statement but not in the company's ledger. To reconcile, these charges must be deducted on the book side to adjust the ledger balance downward.
A deposit in transit was omitted from the cash book but appears on the bank statement. In the reconciliation, you would:
Subtract the deposit amount from the book balance
Add the deposit amount to the bank balance
Ignore it because it appears on the bank statement
Add the deposit amount to the book balance
Since the deposit in transit is recorded by the bank but was omitted in the cash book, the book balance is understated. You must increase the book balance by the deposit amount to bring the two into agreement.
A customer's non-sufficient funds (NSF) check appears on the bank statement but has not been recorded in the cash book. The reconciliation requires you to:
Subtract the NSF amount from the bank balance
Add the NSF amount to the book balance
Ignore it in the reconciliation
Subtract the NSF amount from the book balance
An NSF check reduces available cash because the deposit is returned. Since the cash book has not been adjusted, you must deduct the check amount from the book balance in the reconciliation.
Interest earned appears on the bank statement but has not been recorded in the company's books. In the bank reconciliation, you should:
Ignore it since it is immaterial
Subtract the interest amount from the book balance
Add the interest amount to the bank balance
Add the interest amount to the book balance
Interest earned increases the company's cash balance but is shown only on the bank statement until recorded in the books. To reconcile, you increase the book balance by the interest amount.
A credit memorandum on the bank statement indicates that the bank collected a note receivable on behalf of the company. How should this be handled in the reconciliation?
Subtract the collected amount from the book balance
Add the amount to the bank statement balance
Ignore it because it's not a cash transaction
Add the collected amount to the book balance
When the bank collects notes receivable for the company, the cash account increases. Since the collection appears on the bank statement only, you must record and add the amount to the book balance.
After completing a bank reconciliation, the adjusted balance in the company's cash book should equal:
The sum of outstanding checks and deposits in transit
The adjusted bank statement balance
The ending balance per the general ledger before adjustment
The beginning cash balance
A correctly prepared bank reconciliation will bring the adjusted book balance and adjusted bank statement balance into agreement. Any reconciling items will have been accounted for on both sides.
Which of the following items is NOT a typical reconciling item on a bank reconciliation statement?
Bank service charges
Accounts receivable balance
Deposits in transit
Outstanding checks
Reconciling items include timing differences like outstanding checks and deposits in transit, and items such as service charges that affect the book balance. Accounts receivable is unrelated to cash reconciliation and does not appear on the bank reconciliation.
A check for $1,000 was recorded in the cash book but the bank cleared it for $900. On the bank reconciliation, you should:
Add $100 to the book balance
Add $100 to the bank statement balance
Subtract $100 from the bank statement balance
Subtract $100 from the book balance
The bank underpaid the check by $100 relative to the company's records. To reconcile, the bank statement balance must be increased by $100 to match the book balance.
A deposit of $950 was recorded in the company's cash book as $590. How should this error be corrected in the reconciliation?
Add $360 to the book balance
Subtract $360 from the bank statement balance
Add $360 to the bank statement balance
Subtract $360 from the book balance
The cash book understated the deposit by $360 ($950 ? $590). To correct this bookkeeping error, you increase the book balance by the difference of $360.
At March 31, the cash book shows a balance of $10,000, while the bank statement shows $8,700. Reconciling items: deposits in transit $1,200; outstanding checks $2,300; bank recorded a $500 customer deposit as $50 in error. What is the adjusted bank statement balance?
$7,650
$8,050
$9,150
$6,250
Start with the bank balance $8,700, add deposits in transit $1,200, subtract outstanding checks $2,300, and adjust the bank error by adding $450 (correcting $50 to $500). The result is $8,700 + $1,200 - $2,300 + $450 = $8,050.
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Study Outcomes

  1. Understand bank reconciliation statement principles -

    Learn the fundamental concepts behind bank reconciliation statement questions and answers, including the purpose and components of reconciling book and bank balances.

  2. Identify outstanding items -

    Recognize and categorize outstanding checks, deposits in transit, and bank charges through targeted bank reconciliation practice questions.

  3. Analyze balance discrepancies -

    Examine differences between ledger balances and bank statements to pinpoint errors and omissions in real-world reconciliation scenarios.

  4. Apply credit and debit adjustments -

    Make accurate adjustments for bank fees, interest income, dishonored checks, and other transactions using bank reconciliation exercises.

  5. Construct a complete reconciliation statement -

    Work step-by-step through our bank reconciliation statement quiz to prepare a clear, error-free reconciliation report.

  6. Evaluate reconciliation accuracy -

    Assess your solutions against answer explanations to reinforce correct methods and improve your proficiency in bank reconciliation MCQ topics.

Cheat Sheet

  1. Master the Bank Reconciliation Formula -

    Review the core reconciliation equation: Adjusted Bank Balance = Unadjusted Bank Balance + Deposits in Transit - Outstanding Checks. For example, if your statement shows $10,000, you add a $500 deposit in transit and subtract $700 in outstanding checks to reach $9,800 (AccountingCoach.com). This formula anchors many bank reconciliation statement questions and answers.

  2. Record Bank Charges, Interest & NSF Checks -

    Adjust your cash book by adding interest earned and subtracting bank fees or NSF (non-sufficient funds) items: Adjusted Book Balance = Unadjusted Book Balance + Interest - Fees - NSF. If the bank charged $30 in fees and you earned $20 in interest, your $5,000 balance becomes $4,990 per Kennesaw State University guidelines. Keeping these adjustments top of mind is key for bank reconciliation practice questions.

  3. Identify Timing Differences -

    Outstanding checks and deposits in transit create timing gaps between bank and book balances. According to ACCA, always list these separately: e.g., $2,000 of outstanding checks and $1,200 in transit deposits yield a net $800 timing difference. Mnemonic: "OUT - IN" (Outstanding Out, In Transit In) helps you recall which adjustments affect the bank side.

  4. Spot Common Errors with the 9”Factor Test -

    Transposition or slip errors often produce differences divisible by 9 (e.g., $54 or $162). A quick division check (difference ÷ 9 is whole) signals a likely transposition, per University of Cambridge Accounting notes. Practice spotting these in sample statements to sharpen your error”detection skills, especially for bank reconciliation MCQs.

  5. Use a Systematic 5-Step Approach -

    Follow these steps: 1) Compare opening balances, 2) Tick matched items, 3) List unrecorded items, 4) Compute adjusted balances, 5) Reconcile totals to zero. Structured templates like those in Wiley's Accounting Textbook facilitate accuracy in bank reconciliation exercises. Repeating this workflow before tackling bank reconciliation statement quizzes cements your mastery.

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